U.S. stocks flipped between small gains and losses Tuesday following a recent rally, as investors weighed the prospects of a global recovery with spreading coronavirus outbreaks.
The Dow Jones industrial average shed 170 points, giving back some gains after surging 460 points a day earlier. The Standard & Poor’s 500 lost 0.3%, threatening to snap a five-day winning streak.
The Nasdaq Composite ticked up 0.1%, as another rise in technology shares put the index on pace to close at another record. Shares of Apple and Microsoft both rose at least 1%.
Travel-related stocks fell Tuesday, with United and American Airlines dropping 6% and 5%, respectively. Royal Caribbean and Norwegian Cruise Line both lost more than 2.5% apiece.
Government stimulus and hopes for an economic turnaround have kept investor sentiment upbeat recently, helped by stronger-than-expected data that have bolstered hopes that a recovery is underway.
But pandemic uncertainties are lingering, and the situation is fragile. The U.S. has seen almost 3 million confirmed cases and more than 130,000 deaths, according to Johns Hopkins University data. Globally, there have been 11.6 million cases and almost 540,000 deaths.
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To be sure, investors for the most part have shrugged off continued signs of global economic damage from the pandemic. The S&P 500 index capped its best quarter since 1998 and is back within 6.5% of its February record after tumbling nearly 34% during the March lows.
“The uptick in infections is posing a threat to consumer sentiment,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note to clients. “But investors have continued to focus on the positives. While we expect continued volatility, we think there are grounds for optimism that economies and markets can weather the recent acceleration in infections.”
While investors have focused on hopes for a robust bounce back in the global economy, the worry is that pandemic will continue worsening, with hotspots stretching across the U.S. South and West. Cities in major economies like Australia and Britain have seen pockets of new contagions, requiring new lockdown measures. That trend is likely to keep shoppers and businesses from spending.
Arizona is one of the hot spots in the U.S. The state surpassed 100,000 cases Monday, and more than 62,000 of the 101,441 reported cases involve people younger than 44, state officials said.
Data released Tuesday showed U.S. hiring jumped to a record in May and layoffs fell as businesses reopened, but economists caution that the labor market could cool after states paused reopening efforts recently. The Job Openings and Labor Turnover Survey, a widely watched measure of labor demand, showed hirings rose by 2.4 million jobs to 6.5 million in May, the Labor Department said Tuesday.
The worst-case scenario for markets is that governments resume more widespread lockdowns implemented during the spring and choke off the budding economic recovery. Either way, many economists expect it will take years for the global economy to return to the level of output it was at before the pandemic.
The resurgence of virus cases comes as Congress debates over whether to extend a number of fiscal measures, including additional federal unemployment benefits set to expire at the end of July.
“The U.S. has so far delivered coordinated fiscal and monetary support sufficient to offset the estimated initial shock from the pandemic and spillovers to the full economy,” analysts at BlackRock Investment Institute said in a note. “Any premature reduction of stimulus in July, and as the shock persists, would increase the risk of financial vulnerabilities among businesses and households facing cashflow stresses.”
Precious metals fell, as did the 10-year Treasury yield.
The yield on the 10-year Treasury slipped to 0.66% from 0.68% late Monday. It tends to move with investors’ expectations for the economy and inflation.
Benchmark U.S. crude was up 0.8% at $40.94 per barrel after earlier flipping between losses and gains. Brent crude, the international standard, rose 0.5% to $43.33 per barrel.
In Europe, France’s CAC 40 fell 0.7%, while Germany’s DAX slipped 0.9%. Britain’s FTSE 100 dropped 1.5%.
In Asian trading, Japan’s benchmark Nikkei 225 dropped 0.4% and South Korea’s Kospi gave up 1.1%. Australia’s S&P/ASX 200 was little changed, edging less than 0.1% lower. Hong Kong’s Hang Seng shed 1.5%, while the Shanghai Composite gained 0.4%.
Contributing: The Associated Press
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